Broadcom's Push Into LTE Begins Now

Broadcom is ready to take on the LTE market, and its latest system-on-a-chip proves it.

It's time for Broadcom(NASDAQ:BRCM) to show the mobile world what it can do in the LTE market. The company just announced its M320 and M340 systems-on-a-chip (SoC) with integrated LTE -- a first for the company.

The news comes on the heels of Broadcom's acquisition of Renesas Electronics for $164 million back in September. Broadcom purchased Renesas for the sole purpose of entering the LTE market and had expected to bring its LTE SoC to the mobile market quickly.

Broadcom President and CEO Scott McGregor said at the time, "Today's transaction firmly establishes Broadcom's presence in the rapidly growing LTE market with a production-ready, carrier-validated SoC."

Though the new chips don't have earth-shattering specs, they're a good start for Broadcom's dive into LTE.

Chip specsThe new M320 LTE SoC is a dual-core production ready chip, while the M340 has a quad-core and will be available for sampling in the first half of this year. That means the more powerful M340 won't see production until the second half of this year at the earliest.

The chips will be pin-to-pin compatible, so original equipment manufactures can design devices with either chip in mind. The LTE connectivity can reach speeds up to 150Mbps on both FDD-LTE and TD-LTE and works on 3G HSPA+ and 2G networks. The chips also work on more than 40 networks in 20 countries and are pre-integrated with Android KitKat.

Why Broadcom needs thisUp until now, Broadcom hasn't had any integrated LTE systems-on-a-chip, an area that the mobile market is already headed. Qualcomm(NASDAQ:QCOM) is the undisputed leader in integrated LTE chips right now, and holds about 95% of LTE revenue share. Intel(NASDAQ:INTC) is also fighting hard in the LTE market, and began shipping its own integrated LTE chip, the XMM 7160, back in August. ABI Research said Intel is expected to become a "significant challenger" to Qualcomm over the next few years, which means Broadcom's competition is getting even tougher.

The LTE market is growing quickly and by 2018 shipments of LTE chips in handsests are expected to hit 850 million. That's a huge opportunity for any chipmaker in the industry, Broadcom included.

Foolish thoughtsJust two months ago, Qualcomm introduced its Snapdragon 410 integrated LTE 64-bit chip, aimed at devices $150 or less. There are two things that should worry Broadcom investors about this:

The first is that Qualcomm's processor is 64-bit capable, and Broadcom's is not. While 64-bit mobile processing is still in its infancy and there aren't a lot of direct applications for it right now, it still shows Qualcomm's technological superiority over the competition. As developers and OEMs release new ways to tap 64-bit technology, Qualcomm's chip will be ready to handle them and the competition will again be further behind.

The second significant difference is that the Snapdragon 410 is, again, made for devices priced at $150 or less, while the M320 and M340 are for devices priced $300 and less. So not only is the Snapdragon more powerful, but it can also theoretically be placed in devices that cost less than ones running Broadcom's new chips. This, again, is to Qualcomm's advantage. It doesn't mean that OEMs won't choose the M320 over a Snapdragon alternative, but right now it appears Qualcomm is giving OEMs every incentive to choose its chips over others.

Broadcom investors should be pleased to see the company enter the LTE market but should keep expectations in check. There's no doubt the M320 and M340 will gain some design wins, but it's going to be a long and difficult road in gaining traction against the current chip leaders.